An appeals court has issued an insightful decision on the availability of damages when an involuntary bankruptcy petition is filed in bad faith. See Stursberg v. Morrison Sund PLLC, No. 23-1186, 2024 U.S. App. LEXIS 20286...more
Under federal law, a debtor may be criminally prosecuted for various kinds of misconduct in connection with a bankruptcy case, including concealing assets, falsifying information, embezzlement, or bribery. See 18 U.S.C. §§...more
8/27/2024
/ Bankruptcy Code ,
Bankruptcy Court ,
Bribery ,
Commercial Bankruptcy ,
Corporate Misconduct ,
Criminal Prosecution ,
Debtors ,
Embezzlement ,
Falsified Documents ,
Fraudulent Concealment ,
Indictments
In Harrington v. Purdue Pharma L.P., 144 S. Ct. 2071 (2024) (“Purdue”), the Supreme Court held that the Bankruptcy Code does not authorize nonconsensual releases of nondebtors as part of a chapter 11 plan. The Court narrowly...more
8/1/2024
/ Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Harrington v Purdue Pharma L P ,
Indemnification Clauses ,
Non-Debtors ,
Preliminary Injunctions ,
Purdue Pharma ,
SCOTUS
We have blogged previously about the intersection of fraud and bankruptcy. A recent decision from the U.S. District Court for the Central District of California justifies an addition to that series of posts.
Thomas...more
To file bankruptcy in the U.S., a debtor must reside in, have a domicile or a place of business in, or have property in the United States. 11 U.S.C. § 109(a). In cross border chapter 15 cases, courts have considered whether...more
4/26/2024
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 15 ,
Commercial Bankruptcy ,
Cross-Border ,
Debtors ,
Domicile ,
Foreign Bankruptcies ,
Insolvency ,
Jurisdiction ,
UK
In 2019, Congress enacted the Small Business Reorganization Act, which created subchapter V within chapter 11 of the Bankruptcy Code. Congress’ intent was to create a more cost-efficient and streamlined restructuring process...more
We have previously blogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C....more
Publicly, Diamond Finance Co. (“Diamond”) provided car loans to individuals with less-than-stellar credit. While Diamond did have “some actual business,” its purpose “quickly became a front to lure unsuspecting investors.”...more
The Fifth Circuit recently ruled that a debtor can sell a preferential transfer action under Bankruptcy Code section 363 to a purchaser that is not a representative of the bankruptcy estate. Briar Cap. Working Fund Cap.,...more
Judge Jacqueline P. Cox recently found that three Illinois attorneys violated their ethical obligations by failing to return their client’s phone calls. She thus ordered the attorneys to return half of their...more
We have previously blogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11...more
Federal law assigns to U.S. district courts original jurisdiction over all cases under Title 11 (the Bankruptcy Code) and all civil proceedings arising under Title 11 or arising in or relating to Title 11. See 28 U.S.C. §...more
An appeals court ruled recently that chapter 5 avoidance actions are property of a debtor’s bankruptcy estate that can be sold in section 363 sales. In re Simply Essentials, LLC, No. 22-2011, 2023 U.S. App. LEXIS 21814 (8th...more
Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state...more
7/31/2023
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Bankruptcy Trustees ,
Chapter 7 ,
Class Action ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Fraudulent Transfers ,
Sovereign Immunity ,
Trustees
On June 30, the Supreme Court ruled that the Biden administration did not have authority to forgive student loans under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). Despite this defeat,...more
7/25/2023
/ Bankruptcy Code ,
Bankruptcy Court ,
Biden Administration ,
Brunner/Gerhardt Test ,
Class Action ,
Debt ,
Higher Education Act ,
Loan Forgiveness ,
Relief Measures ,
SCOTUS ,
Student Loans ,
Students ,
Unsecured Debt
Sometimes we blog about cases with unusual fact patterns. The cases don’t stand for any overriding legal principle. They might not have application beyond the parties to them. But they can make for good reading, giving...more
Persuading a bankruptcy judge to find “excusable neglect” after missing a filing deadline is usually a tough sell. You’d think it would be particularly hard when the party seeking relief was “belligerent and disrespectful to...more
We have previously blogged about Bartenwerfer v. Buckley, No. 21-908, a Supreme Court case concerning the scope of the fraud exception to the dischargeability of debts in bankruptcy. Section 523 of the Bankruptcy Code exempts...more
This post is about a junkyard, hogs getting slaughtered, and a bankruptcy judge poised to sanction a creditor and her counsel. The message from the case to would-be claimants in other cases is simple: do not “overreach.” In...more
The concept of “property of the estate” is important in bankruptcy because it determines what property can be used or distributed for the benefit of the debtor’s creditors. Defined by section 541 of the Bankruptcy Code,...more
In 2022, there were several high-profile crypto bankruptcy filings. A big question in these cases is whether there will be any money to satisfy unsecured creditor claims. If there are funds to distribute, then the...more
A U.S. bankruptcy court recently denied chapter 15 recognition to a case in the Isle of Man (IOM). The court ruled that the foreign case was neither a foreign main proceeding nor a foreign non-main proceeding...more
To encourage parties to transact with debtors in bankruptcy, the Bankruptcy Code in corporate bankruptcies provides highest priority to “administrative expenses,” which include “the actual, necessary costs and expenses of...more
On September 15, President Biden announced a tentative deal with unions representing tens of thousands of railroad workers that helped narrowly avoid a strike that threatened to devastate the country’s delicate supply chains...more
A bankruptcy court ruled that a creditor didn’t need to seek derivative standing to sue a liquidating trustee. The creditor, himself a trustee of the debtor’s employee stock-option plan, had standing to sue without prior...more